(Repeats to wider audience with no change to text)
By Kevin Plumberg
HONG KONG, May 23 (Reuters) - Asian stocks edged higher on
Friday, helped by a slight dip in oil prices from record highs,
and government bond yields climbed on fears of rising
inflation.
Oil prices slipped below $135 a barrel on Thursday but were
up 3.8 percent on the week, stoking fears that energy costs
could cut consumer demand and choke business investment.
The drugs sector lifted Japan's Nikkei share average
<> 0.3 percent after Roche Holding AG <ROG.VX> said it
would increase its stake in Chugai Pharmaceutical Co Ltd
<4519.T>.
Korea's KOSPI <> edged up 0.1 percent, and Singapore's
Straits Times index <.FTSTI> added 0.4 percent.
Bond prices sank as investors focused on inflation
pressures around the world that continue to build and increase
the potential for tighter monetary policy.
Growing expectations that the U.S. Federal Reserve may have
to raise interest rates to fight price pressures clobbered U.S.
Treasuries, propelling the benchmark 10-year Japanese
government bond yield to a fresh seven-month high.
"We're seeing a bit of a shift in funds from bonds to
stocks," said Masayoshi Okamoto, head of dealing at Jujiya
Securities.
The benchmark 10-year Japanese government bond yield
<JP10YTN=JBTC> climbed 5.5 basis points to 1.710 percent after
jumping as much as 8 basis points at one stage to 1.735
percent, the highest since October.
On Thursday, the benchmark 10-year U.S. Treasury note
<US10YT=RR> dropped sharply to yield 3.92 percent.
The bond market has been volatile as investors who had bet
on higher prices during the brunt of the credit crisis unwind
those positions. Also, despite the slight fall in oil prices,
central banks around the world have made clear that inflation
is their main focus, making higher interest rates likely.
U.S. light crude prices <CLc1> settled on Thursday at
$130.60 a barrel, well off a record high of $135.09. However,
many analysts believe it is inevitable that oil prices will
continue to climb because of the large amount of speculation
and insatiable demand from developing economies, such as China.
"Oil would not be at $130 a barrel without China's roaring
economy and voracious appetite for energy of all types,
including oil. If China keeps growing, as we expect, upward
pressure on oil prices will persist," said Donald Straszheim,
vice chairman and economist with Roth Capital Partners in Los
Angeles.
The U.S. dollar steadied as oil prices eased, but the
currency stayed in sight of a one-month low against the euro on
worries that inflation could lead to a deeper U.S. slowdown.
The dollar rose on Thursday, boosted by a surprise drop in U.S.
weekly initial jobless claims.
The euro was unchanged at $1.5725 <EUR=>, while the dollar
was flat at 104.08 yen <JPY=>.
Spot gold <XAU=> was steady at around $917 an ounce.
